South Africa’s Corn Crop Bounces Back, Driving Exports

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South Africa’s corn crop is projected to bounce back this year, helped by favorable weather and an elevated corn price. After last year’s paltry crop due to drought, expectations are that the country will reclaim its role as breadbasket for southern Africa.

These maps show Gro’s drought indicator based on evapotranspiration anomalies. The map on the left is the most recent data from the end of October. The central areas of the country, including Free State and North West, show much more favorable readings than those from December 2018 when rain was significantly delayed. Rain during November 2019 should further improve the drought indicator when it is updated at the end of the month. 

Commercial area planted in corn is forecast to increase 9.5% compared with last year, according to the recent Intentions to Plant report from the Crop Estimates Committee, part of South Africa’s Department of Agriculture, Forestry and Fisheries. That should lead to an estimated 1 million to 2 million tonnes of net corn exports in the marketing year starting next May, a normal level, compared with 412,000 tonnes of net exports in the current marketing year, according to Gro Intelligence estimates.

Last year’s drought and lower available supply have kept corn prices high, motivating farmers to plant more this growing season. Yellow corn futures prices are 14% higher than a year ago on the Johannesburg Stock Exchange as of Oct. 31. Last January, South Africa imported corn for the first time in nearly two years. Since then 519,000 tonnes of yellow corn have been imported from Argentina and Brazil, while 873,000 tonnes of white and yellow corn have been exported, mostly to neighboring countries. Yellow corn is generally used for animal feed.

Although October 2019 had dry conditions similar to the same month last year, the past couple of weeks have seen slightly above average rainfall in the major corn regions of Mpumalanga, Free State, and North West, and more rain is expected, according to the current 15-day forecast by NOAA’s Global Forecast System (GFS). The optimal planting dates for corn run from the middle of October to the middle of November for the central to eastern regions and between middle November to the end of December for the western regions.

The chart on the left shows futures prices for yellow corn on the Johannesburg Stock Exchange steadily rising in 2018 as weather deteriorated and then maintaining elevated prices leading up to planting for the new season. The chart on the right shows rainfall for the three largest corn producing states in South Africa, including the current 15-day forecast. Minimal rain fell through September and most of October, but above average rainfall fell so far in November with some additional precipitation to follow, according to forecasts from NOAA’s GFS. 

Gro’s pace analysis of exports for the current 2018/19 season that started May 1, which compares exports so far this season to previous seasons, projects exports of 1.125 million tonnes, a little higher than the USDA’s current 1 million-tonne forecast. Gro’s analysis of imports projects 713,000 tonnes, compared with 600,000 tonnes estimated by the USDA.

Early forecasts for the 2019/20 marketing year beginning next May, assuming normal weather for the crop, project South Africa resuming bigger exports amid a larger crop. The South Africa post of the USDA’s Foreign Agricultural Service currently assumes a conservative yield, about 7% below Gro’s trend yield calculation, which uses linear regression of yields over past decades, leading to 13.3 million tonnes of production. USDA’s WASDE estimate is a little higher at 14 million tonnes of production.

The South African Weather Service’s most recent Seasonal Climate Watch forecast expects lower-than-normal rainfall from November to January in the eastern parts of the country, but above-normal rainfall in the western and central parts of the country.

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